[Source: Reuters]

A U.S. trade court on Wednesday blocked President Donald Trump’s tariffs from going into effect in a sweeping ruling that the president overstepped his authority by imposing across-the-board duties on imports from nations that sell more to the United States than they buy.

The Court of International Trade said the U.S. Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president’s emergency powers to safeguard the U.S. economy.

The Trump administration minutes later filed a notice of appeal and questioned the authority of the court. The decisions of the Manhattan-based Court of International Trade, which hears disputes involving international trade and customs laws, can be appealed to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., and ultimately the U.S. Supreme Court.

Trump has made charging U.S. importers tariffs on goods from foreign countries the central policy of his ongoing trade wars, which have severely disrupted global trade flows and roiled financial markets.

Companies of all sizes have been whipsawed by Trump’s swift imposition of tariffs and sudden reversals as they seek to manage supply chains, production, staffing and prices.

A White House spokesperson on Wednesday said U.S. trade deficits with other countries constituted “a national emergency that has decimated American communities, left our workers behind, and weakened our defense industrial base – facts that the court did not dispute.”

Financial markets cheered the ruling. The U.S. dollar rallied following the court’s order, surging against currencies such as the euro, yen and the Swiss franc in particular. Wall Street futures rose and equities across Asia also rose.

The ruling, if it stands, blows a giant hole through Trump’s strategy to use steep tariffs to wring concessions from trading partners, draw manufacturing jobs back to U.S. shores and shrink a $1.2 trillion U.S. goods trade deficit, which were among his key campaign promises.

Without the instant leverage provided by the tariffs of 10% to 54% that Trump declared under the International Emergency Economic Powers Act (IEEPA) — which is meant to address “unusual and extraordinary” threats during a national emergency — the Trump administration would have to take a slower approach of lengthier trade investigations under other trade laws to back its tariff threats.

The ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Center on behalf of five small U.S. businesses that import goods from countries targeted by the duties and the other by 13 U.S. states.

The companies, which range from a New York wine and spirits importer to a Virginia-based maker of educational kits and musical instruments, have said the tariffs will hurt their ability to do business.

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